EG

Everest Group is a global property, casualty and specialty reinsurer trading at a strikingly low valuation: 8.9x FY2025 diluted EPS of $37.80 and just 0.8x sales. FY2025 net income rose 15.9% to $1.59B and EPS climbed 18.9% (helped by a 5.9% reduction in shares), while book value grew with stockholders' equity up 11.4% to $15.5B. The company returned capital aggressively — $797M of buybacks (up 298.5%) plus $335M in dividends — a clear signal that management views the stock as undervalued relative to its $16.6B of retained earnings.

The central debate is reserve adequacy. FY2025 net income absorbed $657M of pre-tax unfavorable prior-year reserve development, 'primarily driven by net unfavorable development on prior year reserves from elevated loss experience in excess casualty and U.S. liability lines primarily on accident years 2022-2024.' That followed an even larger $1.5B of adverse development in FY2024. This is the crux of why the stock is cheap. However, management has acted decisively: it 'significantly fortified our U.S. casualty reserves,' took 'aggressive underwriting action in certain classes exposed to social inflation,' entered an adverse development cover (ADC) reinsuring up to $1.2B of accident-year-2024-and-prior North American liabilities, and sold renewal rights for certain commercial retail lines to AIG for $252M — collectively de-risking the legacy book.